Lagos — The Nigerian Stock Exchange on Monday expressed dismay over the slow pace of the government's privatisation programme during the year 2000, and warned that a long and drawn out implementation of the programme could send the wrong signals to potential investors.
"The situation where a privatisation issue takes about a year to conclude distorts investments and discourages subsequent participation in the programme," Dr Ndi Okereke-Onyiuke, Director-General of the NSE, said in a review of the market's performance in 2000.
Nigeria's government has embarked on a privatisation programme under which state-owned enterprises are scheduled to be privatised, many of them through the stock market. Government initially gave end of 1999 as the completion date of the first phase of the programme, but later moved this to April 2000.
By the end of last year, however, privatisation of many of the enterprises in this group had not been completed, although work on those in the second group had commenced. Enterprises in the first phase included oil marketing companies, cement manufacturing firms, and banks. Government said its shares in these enterprises, were to be sold through the local stock market, on which the firms were already quoted.
One year on, however, Okereke-Onyiuke said that even in some of these quoted companies from which government divested, "allotment (of shares) had not been made because of political reasons." She said this was "stifling the growth of the capital market."
"It's also discouraging investors whose money has been tied up for more than one year," she added. There had been talk last year about the privatisation, through the Exchange, of two prime utilities - the Nigerian Telecommunications (Nitel) and the National Electric Power Authority (NEPA). The strategic importance of these two utilities perhaps explains the "hoopla" that Okereke-Onyiuke said greeted the announcement of their planned flotation on the Nigerian market.
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Nigerians eagerly look forward to government's divestiture from these two enterprises whose lack-lustre performances have often left Nigeria in the dark, and a late starter on the Information Super Highway.
Unfortunately, Okereke-Onyiuke said, all the money that foreign investors mobilised in readiness for these two enterprises "has moved to other markets."
She warned that delays in the privatisation process often result in a decline in overall privatisation performance and lower sales proceeds.
On the performance of the Nigerian market, she said the NSE All-share index grew by 54 percent in 2000, a performance she said, was sure to retain for the market, the status of the best performer among emerging markets anywhere, for the second year running.
Despite this performance, Okereke-Onyiuke called on the government to take certain measures this year to increase the market's attractiveness to potential investors. She asked government to abolish stamp duties on secondary market transactions.
Government, she said, should also exempt brokerage commission from the Value Added Tax, and reduce to five percent the Withholding Tax on dividend. These measures, she said, should be taken "with a view to enhancing the international competitiveness of returns on investments in Nigerian securities."
